The rupee rose 0.1 percent to 61.1450 per dollar in Mumbai,
prices from local banks compiled by Bloomberg show. The currency
touched 61.74 earlier, the weakest level since March 5, as U.S.
President Barack Obama’s authorization of air strikes in Iraq
led to concern escalating geopolitical tensions will prompt
investors to shun emerging-market assets.

“Exporters selling dollars helped the rupee recover after
geopolitical tensions caused a panic this morning, hitting all
emerging-market currencies,” Vikas Babu, a foreign-exchange
trader in Mumbai at state-run Andhra Bank, said by phone. The
rupee weakened as much as 0.8 percent earlier in the day.

The yield on the 8.4 percent government bonds due 2024
climbed to as high as 8.68 percent before ending at 8.64
percent, little changed from yesterday, according to the central
bank’s trading system. The rate jumped 11 basis points, or 0.11
percentage point, this week amid speculation the central bank
will refrain from cutting interest rates after it flagged risks
to its inflation target.

Obama authorized the strikes against militants to prevent
genocide in Iraq, deepening risks as Russia retaliated against
U.S. and European sanctions by banning some food imports.

The rupee’s one-month implied volatility, a gauge of
expected moves in the exchange rate used to price options,
jumped 18 basis points to 7.94 percent today.

Three-month offshore non-deliverable forwards fell 0.1
percent to 62.24 per dollar, data compiled by Bloomberg show.
Forwards are agreements to buy or sell assets at a set price and
date. Non-deliverable contracts are settled in dollars.